Economics: Money, Inflation, Public Expenditure, and Debt

Determinants of money supply refer to factors that influence the amount of money in circulation within an economy. These factors include monetary base, reserve requirements, currency to deposit ratio, deposit expansion multiplier, and public's preferences for cash versus deposits.

Inflation can have various effects on the economy, including eroding purchasing power, reducing the value of money, distorting price signals, redistributing income and wealth, increasing uncertainty, and affecting economic growth.

Measures to control inflation include monetary policies (such as raising interest rates, reducing money supply growth), fiscal policies (like cutting government spending, increasing taxes), supply-side policies (enhancing productivity, reducing regulations), wage and price controls, and inflation targeting by central banks.

Public debt can take different forms, including marketable securities (like treasury bonds), non-marketable securities (such as treasury savings bonds), loans from international financial institutions, and borrowings from central banks or other governments. It represents the total outstanding borrowing by the government to finance its spending.

Growing public expenditure can be caused by factors such as increased government services and programs, rising population, social welfare demands, infrastructure development needs, defense spending, economic recession, and political pressures.

Monetary Aggregates Approach

To reduce transaction costs

The average number of times a unit of money is used in a transaction

It is a financial liability of the government

To bridge the gap between public expenditure and revenue